Introduction
This topic contains information on stocks, stock options, bonds, and mutual funds.
Stocks, Stock Options, Bonds, and Mutual Funds
Vested assets in the form of stocks, government bonds, and mutual funds are acceptable sources of funds for the down payment, closing costs, and reserves provided their value can be verified. The lender must verify the borrower’s ownership of the account or asset. The value of the asset and any related documentation must meet the requirements outlined in the table below.
| Asset Type | Determining the Value of the Asset |
|---|---|
| Stocks and mutual funds |
The lender must determine the value of the asset (net of any margin accounts) by obtaining either
|
| Stock options |
The value of vested stock options can be documented by
|
| Government bonds |
The value of government bonds must be based on their purchase price unless the redemption value can be documented. |
When used for the down payment or closing costs, if the value of the asset (as determined above) is at least 20% more than the amount of funds needed for the down payment and closing costs, no documentation of the borrower’s actual receipt of funds realized from the sale or liquidation is required. Otherwise, evidence of the borrower’s actual receipt of funds realized from the sale or liquidation must be documented.
When used for reserves, 100% of the value of the assets (as determined above) may be considered, and liquidation is not required.
Refer to B3-4.3-03, Retirement Accounts, for the requirements pertaining to the use of retirement accounts for the down payment, closing costs, or reserves.
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